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On October 2, 2014, U.S. District Judge Miriam Goldman Cedarbaum of the Southern District of New York denied the petition of Gol Linhas Aereas Inteligentes SA, a Brazilian airline, to enforce an arbitration award of US$55 million rendered in Brazil against Simpson Thacher clients MatlinPatterson Global Advisers in 2011.

In 2007, two indirect MatlinPatterson subsidiaries sold their shares in VRG, a regional airline, to Gol.  The Purchase and Sale Agreement (“PSA”) included an arbitration clause that MatlinPatterson didn’t sign. They did, however, sign a non-compete addendum with Gol in the passenger airline market.  When the deal closed, the parties were unable to reach an agreement on the purchase price adjustment and Gol commenced ICC arbitration in Brazil pursuant to the PSA’s arbitration clause.  After rejecting MatlinPatterson’s jurisdictional challenges and holding an evidentiary hearing on the merits, the tribunal issued a concealment award in 2011 finding that VRG, which was merged with Gol during the pendency of the arbitration, was entitled to a purchase price adjustment of US$55 million plus interest and arbitration costs and that the MatlinPatterson subsidiaries were liable for that adjustment amount.

MatlinPatterson turned to Simpson Thacher to oppose enforcement of the Brazilian arbitration award in the United States.  The Firm filed voluminous submissions, including fact witness and foreign law expert affidavits,  in opposition to VRG’s petition.  On January 19, 2012, Judge Cedarbaum held oral argument.  At the conclusion of the hearing, Judge Cedarbaum denied VRG’s enforcement petition because MatlinPatterson only signed an addendum to the 2007 contract with Gol, it never consented to arbitrate the purchase price issue. The U.S. Court of Appeals for the Second Circuit later dismissed the ruling and instructed Judge Cedarbaum to reexamine using a different approach.

Judge Cedarbaum once again ruled that the US$55 million arbitration award is unenforceable on account that MatlinPatterson never agreed to arbitrate pricing disputes over the 2007 transaction, concluding that MatlinPatterson “never consented to submit disputes—whether about arbitrability or anything else—to arbitration.”

The Simpson Thacher team consisted of Robert Smit, Tyler Robinson, Josh Slocum and William Pilon. Former Simpson Thacher attorneys Juan Arteaga and Michelle Hertz also worked on the matter.